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Employer health coverage questions addressed

The IRS and Treasury Department, along with two other federal
departments, on Thursday further described planned guidance on
provisions for employer-sponsored health coverage mandated by the
Patient Protection and Affordable Care Act (PPACA), P.L. 111-148,
scheduled to take effect in 2014.

Treasury and the IRS issued Notice
2012-17 covering frequently asked questions (FAQs) by employers.
The Departments of Labor and Health and Human Services simultaneously
issued substantively identical notices, and the three departments will
collaborate in developing the anticipated guidance.

Automatic enrollment to be delayed

Under regulations to be issued by the Labor Department, employers
with more than 200 employers are required by the PPACA to
automatically enroll new full-time employees in a health benefit plan
they offer. FAQs issued last year indicated the Labor Department
planned to issue the regulations by 2014. However, according to the
FAQs released Thursday, Labor says the regulations will not be ready
to take effect by 2014, because of a need for coordination in
developing the guidance and its smooth implementation. Moreover, Labor
has taken the position that employers are not required to comply with
the automatic enrollment provisions until it issues the regulations.

Counting full-time employees

The FAQs also described planned approaches to determining whether an
employee meets the 30-hour-per week threshold for being considered a
full-time employee and thus counted toward the threshold of 50 or more
employees that subjects an employer to the “shared responsibility”
provisions of Sec. 4980H. Under those provisions, an employer is
subject to a penalty if the employer-sponsored health coverage does
not provide “minimum essential coverage” or is not affordable relative
to the employee’s household income.

The IRS and Treasury are considering a safe harbor of a look-back
period of three months (and not more than 12 months) for determining
if an employee meets the definition of a full-time employee. This
approach was outlined in Notice
2011-36.

Another planned safe harbor will allow use of the employee’s Form
W-2 wages, in lieu of household income, to determine whether coverage
is affordable.

Waiting period

The PPACA also limits to 90 days a group health insurer’s enrollment
waiting period. The agencies are developing guidance on how to
coordinate this period with the look-back safe harbor for determining
the number of full-time employees.

Comments are requested by April 9 and should be sent to the Labor
Department in a form and manner described in the notice. All comments
will be shared by the three departments.

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